The supply of movie tickets at one theater’s box office for this Saturday’s 4:30 show of a new movie is A) perfectly elastic until all seats are filled. B) unit elastic. C) perfectly inelastic. D) elastic. ANSWER C
Date: September 9th, 2020
The market demand for wheat is Q = 100 – 2p + 1pb, where pb is the price of barley. If the price of wheat is $2 and the price of barley is $4, the cross-price elasticity of demand A) equals (4/100). B) equals (-2/100). C) equals (-4/25). D) cannot be calculated without more information. […]
Date: September 9th, 2020
If the supply curve for orange juice is estimated to be Q = 40 + 2p, then A) supply is price elastic at all prices. B) supply is price inelastic at all prices. C) supply is elastic only at prices below 20. D) No general statements about price elasticity of supply can be made. […]
Date: September 9th, 2020
Assume the market demand for wheat may be written as Q = 45 – 2p + 0.3Y + 1pb where Y refers to income and pb refers to the price of barley. Assuming that wheat and barley both sell for $1, and income is $20, calculate the price elasticity, cross price elasticity and income elasticity […]
Date: September 9th, 2020
How will a decrease in price affect a firm’s revenues? A) It depends on the price elasticity of demand. B) Revenues will stay the same. C) Revenues will decrease. D) Revenues will increase. ANSWER A
Date: September 9th, 2020
The market demand for wheat is Q = 100 – 2p + 1pb + 2Y. If the price of wheat, p, is $2, and the price of barley, pb, is $3, and income, Y, is $1000, the income elasticity of wheat A) is 2 (1000/2099). B) is 2. C) is 1/2 (1000/2099). D) […]
Date: September 9th, 2020
On a linear demand curve, the lower the price, A) the less elastic is demand. B) the more elastic is demand. C) the elasticity equals -1. D) the elasticity equals zero. ANSWER A
Date: September 9th, 2020
The elasticity of demand for employees is -0.50. It is also estimated that the existing minimum wage (price floor) has increased the raise the wage by 25% above equilibrium wage. How much would the employment change if the price floor was eliminated? A) Employment would decrease by 12.5%. B) Employment would increase by 12.5%. C) […]
Date: September 9th, 2020
A horizontal demand curve for a good could arise because consumers A) are irrational. B) are not sensitive to price changes. C) view this good as identical to another good. D) have no equivalent substitutes for this good. ANSWER C
Date: September 9th, 2020
One reason the U.S. government might subsidize research of an alternative to crude-oil based gasoline is that A) more substitutes will reduce the price of crude-oil based gasoline. B) more substitutes will increase the elasticity of crude-oil based gasoline. C) more substitutes will reduce the impact of supply shocks on the price of crude-oil based […]
Date: September 9th, 2020
